- Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6% – a 24% growth since then
- Mumbai takes 2nd spot with rental yield of 4.15%, followed by Gurugram with 4.1% – in both cities, rental yield in 2019 was 3.5% each
- Avg. rental rates in key areas across top cities rose 4-9% quarterly between Q4 2023 and Q1 2024
- Typically, avg. rentals rate rise by 5-10% annually – Bengaluru’s Whitefield & Sarjapur Road each saw 8% quarterly growth
- Noida’s Sector 150 saw 9% quarterly rise in avg. rental rates; Delhi's Dwarka saw 6% growth, and Mumbai’s Chembur & Mulund saw 4% growth each
With a steep rise in rental housing demand in the top cities, average rental values have soared and rental yields – the annual ROI investors earn from capital invested in a property – have been heading steadily north. Latest ANAROCK data indicates that as before, IT-dominated Bengaluru tops the list with a rental yield of 4.45% in Q1 2024.
Backed by strong post-pandemic rental demand, rental values in the city's key areas have been rising inexorably after IT companies' return to office call. Bengaluru’s rental yield in pre-Covid 2019 stood at 3.6%, which amounts to a growth of 24% in this period.
Mumbai comes next among the top cities with a rental yield of 4.15% in Q1 2024 as against 3.5% back in 2019 – a 19% growth. Gurugram is close behind with a rental yield of 4.1% in the last quarter against 3.5% in 2019.
|
Cities |
Rental Yield (%) in 2019 |
Rental Yield (%) in Q1 2024 |
|
Gurgaon |
3.5 |
4.1 |
|
Noida |
3.2 |
3.7 |
|
Delhi |
2.2 |
2.9 |
|
Pune |
3.3 |
3.85 |
|
Bangalore |
3.6 |
4.45 |
|
Mumbai |
3.5 |
4.15 |
|
Navi Mumbai |
2.8 |
3.4 |
|
Thane |
2.7 |
3.25 |
|
Kolkata |
3.3 |
3.8 |
|
Hyderabad |
2.6 |
3.2 |
|
Chennai |
2.7 |
3.1 |
Source: ANAROCK Research
“Residential rental yields in India had chronically stagnated before the Covid-19 pandemic, with the national average at just 3% for many years,” says Santhosh Kumar, Vice Chairman – ANAROCK Group. “With post-pandemic rental demand soaring after offices resumed, rental yields are heading north too. IT-dominated cities including Bengaluru, Gurugram, Pune and Noida, and also MMR, have seen considerable upticks in their rental values, and therefore yields.”
Residential rental values in India’s top cities have resurged tremendously after the pandemic, with 2023 seeing them soar by over 30% y-o-y. In the last quarter of 2023, rental values stabilized in most cities as renting activity usually abates in the last quarter of the year. However, the rental real estate market picked up momentum again in the first quarter of 2024.
Rental Value Growth in Q1 2024
In the prominent localities of the top 7 cities, there has been average jump of 4-9% jump in residential rents between in Q1 2024. Considering that the typical annual increase is 5-10%, this is very significant and while it certainly bodes well for landlords, it signifies a worrisome element of cost-of-living inflation for tenants.
India’s Silicon Valley Bengaluru leads this trend. As per ANAROCK data, the average rental values in Sarjapur Road and Whitefield rose by 8% each in Q1 2024 against the previous quarter. In Sarjapur Road, the average monthly rent in Q4 2023 stood at approx. INR 31,600 for a standard 2 BHK flat of 1,000 sq. ft. – in Q1 2024, it went up to approx. INR 34,000/month. Similarly, Whitefield saw average monthly rents go up from INR 30,200 in Q4 2023 to INR 32,500 in Q1 2024 – an 8% jump. A comparison of rental values between 2022-end and Q1 2024 shows that top localities in Bengaluru saw a staggering hike of 40% and above.
The trend is not limited to Bengaluru; other key cities have also witnessed rental values inflation, though not to the magnitude seen in Bengaluru. In NCR, Noida’s Sector 150 saw average rents rise by 9%, and by Delhi's Dwarka by 6%. In Mumbai, Chembur and Mulund saw 4% growth each in rental rates. In Chembur, the avg. rental rates in Q1 2024 stood at approx. INR 62,500/month as against INR 60,000/month back in Q4 2023.
Kolkata’s Rajarhat saw the lowest increase (3%) in the period – from approx. INR 18,500/month in Q4 2023 to approx. INR 19,000/month in Q1 2024. In both Chennai and Mumbai, rents rose by a more sedate 4% while in Hyderabad, prominent localities like HITECH City and Gachibowli saw rents rise by 5% each in the quarter.
|
Avg. Rents for Standard 2 BHK 1,000 sq. ft. house |
|||||
|
Cities |
Micro Markets |
2022-end |
2023-end |
Q1 2024 |
% Change 2023-end vs Q1 2024 |
|
Bengaluru |
Sarjapur Rd |
24,000 |
31,600 |
34,000 |
8% |
|
Whitefield |
22,500 |
30,200 |
32,500 |
8% |
|
|
Hyderabad |
HITECH City |
24,600 |
31,000 |
32,500 |
5% |
|
Gachibowli |
23,400 |
30,500 |
32,000 |
5% |
|
|
Pune |
Hinjewadi |
21,000 |
25,600 |
26,500 |
4% |
|
Wagholi |
17,000 |
20,600 |
22,000 |
7% |
|
|
NCR |
Golf Course Road |
37,000 |
41,500 |
43000 |
4% |
|
Sohna Road |
28,500 |
32,700 |
34,300 |
5% |
|
|
Sector-150 (Noida) |
19,000 |
22,000 |
24,000 |
9% |
|
|
New Gurugram |
22,500 |
25,500 |
26500 |
4% |
|
|
Dwarka |
22,000 |
25,800 |
27,400 |
6% |
|
|
MMR |
Chembur |
51,000 |
60,000 |
62,500 |
4% |
|
Mulund |
41,000 |
46,500 |
48,500 |
4% |
|
|
Kolkata |
EM Bypass |
22,000 |
25,600 |
27,000 |
5% |
|
Rajarhat |
16,500 |
18,500 |
19,000 |
3% |
|
|
Chennai |
Perambur |
18,000 |
20,200 |
21,000 |
4% |
|
Pallavaram |
17,000 |
19,500 |
20,300 |
4% |
|
Source: ANAROCK Research
“Going by the current momentum, there are no immediate prospects of the rental inflation trend slowing down,” says Santhosh Kumar. “In fact, it is expected to pick up in the next few quarters, as rental activity typically remains high in the first two quarters of as fiscal year.”